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A RERA Bench in Greater Noida?

24 Friday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Buildings, Construction, Property, Real Estate, Real Estate Buyers, Real Estate Developers, Real Estate India, Real Estate India News, Real Estate News, Real Estate Noida, Real Estate Residential, RERA, RERA :: UP, RERA Act

The Noida Extension Flat Owners Welfare Association (NEFOWA) ,a Noida based Welfare Association for homebuyers, have demanded that the Tribunal should set up a bench in Greater Noida to be more accessible to homebuyers, since the Uttar Pradesh Real Estate Regulatory Authority (UP RERA) has been functioning out of Lucknow for the last four months.

The members state that at least 30,000 complaints for various builder projects have been made from Noida and Greater Noida so far but the outreach of RERA to more buyers could only increase if the distance is bridged between the court and the buyers.

For each complaint, the hearing is being scheduled at least twice or thrice if not more. For the buyers who have complained, this entails that they visit Lucknow a many times the hearing is scheduled. Most hearings are during weekdays so people have to take leave from work to attend these. Because Noida and Greater Noida are construction heavy sites, at least a bench of the Tribunal should be located here.

RERA has been constituted to protect the interests of the buyers, so primarily it shouldn’t it be accessible? So far almost 80% RERA Complaints are being made from Noida and Greater Noida as these two cities have the highest concentration of new apartments.

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Register projects or face stringent action?

16 Thursday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Buildings, Construction, Property, Real Estate, Real Estate Buyers, Real Estate Developers, Real Estate News, Real Estate Registration, Real Estate Regulations, Real Estate Residential, RERA :: KARNATAKA

The Karnataka RERA, through its chairman has cautioned the builders and developers throughout the state that they would either have to register themselves mandatorily with RERA or face stringent action.  There are approximately 1700 projects registered with the Karnataka RERA Authority, out of which 725 have been approved. The approval of  573 projects has been in progress and the remaining would get the nod after getting additional information. The Chairman also cautioned that the Authority would find out with help of other governmental agencies how many projects are to be registered and those who are unregistered would be severely penalised, to almost 10% of the project cost.  The authority has so far received 218 complaints, from the buyers, most of which has been resolved.  The authority, which is typically designed to be buyer friendly, is also willing to help the developer or the promoter in case of any issues to be sorted.  Would the Developers register themselves or “face the music”?

How much tax to pay on Real Estate?

07 Tuesday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Buildings, Construction, Development, GST, Property, Real Estate, Real Estate Buyers, Real Estate Developers, Real Estate India, Real Estate India News, Real Estate Investment, Real Estate News, Real Estate Residential, Real Estate Taxation

It came as a recent piece of news that the legislature was planning to churn out a legislation whereby they could bring in Real Estate under the Umbrella of GST. Have we ever wondered as to what prompted the Financial Minister to state so? According to him, the one sector in India where maximum amount of tax evasion and cash generation takes place is the real estate, which is still outside GST, therefore there is a strong case to bring real estate into GST.  How far is this feasible? So far as the realty sector is concerned, under-construction properties are taxed at 12% apart from the Stamp Duty from 4 to 8% and registration charges, and property tax (annual municipal levy) on a property. Before the advent of  GST, service tax was applicable at 4.5% on under-construction properties. However, no credit of tax paid on goods namely on VAT and excise duty was allowed to developers. For a completed property, GST is currently not applicable.  Apart from the above, the computation of revised sale price is a complex as well as time-consuming task. Developers have to depend upon their contractors to know the VAT and excise duty incidence and have to wait for the project to complete before they know how much price reduction can be done finally. While the incidence would depend upon the type of project, estimates suggest that price reduction, even if done on estimated basis, is unlikely to be sufficient to bridge the gap between GST at 12% and service tax at 4.5%. However, the buyers of under-construction properties to re-negotiate with their developers on how much less amount they will have to pay in the wake of ITC (Input Tax Credit). This means that whatever construction takes place post-GST, the developer can claim ITC which can be passed on to the consumer.  But with the imposition of GST on under constructed properties, aren’t the homebuyers reeling towards buying a ready to move in homes as compared to the under constructed ones?
From a consumer’s viewpoint, paying GST and stamp duty for an under-construction property leads to an overall tax outgo of 17-18%, however,  a ready-to-move-in project, a consumer would only have to shell out on stamp duty. The  Developers would not be able to claim input credit and it would become a cost to them. Consumers who have invested into projects that are almost complete will face the brunt of the new policy on the amount to be paid under GST. As a large part of the construction of their project is over beyond one year, their developer will not be able to claim input credit. Although the government has allowed past one-year to claim credit, a majority of them either have not maintained the requisite documents such as invoices or have incurred the taxes beyond past one year.  Wouldn’t complying with the anti-profiteering provision be a huge task? While this is a good principle that can be applied in case of tax saving, if the same is mixed with change in the procurement cost it goes into a grey area. Will it be applied on a project basis, state basis or pan-India basis? Will there be any index for reference?
There is a growing clamour from a large number of states to bring real estate fully under GST. This means that GST should be charged on the sale of completed buildings.  Shouldn’t the government either substantially reduce stamp duty or eliminate it so as to not double tax the consumer?

For more updates please visit http://www.prosperty.co/

 

Can Aadhar help Government grab Benami properties?

07 Tuesday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES, Uncategorized

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Aadhar, Benami Transactions (Prohibition) Act, Buildings, Construction, Demonetisation, Property, Real Estate, Real Estate India, Real Estate India News, Real Estate News, Real Estate Residential

A major part of black money in India is held in the form of benami properties (gold and cash are other forms).  In a bid to fight against the black money held in form of cash, the Government of India announced Demonetisation on November 8, 2016.   Now certain stringent measures to curb the black money are expected on benami properties as well.

Would this  ‘tough action’ be in the form of another legislation, since Indian Government is known for passing numerous legislations, but fail miserably in implementing most of them? The best example, is the Benami Transactions (Prohibition) Act, passed in 1988 was gathering dust without any action.

Though the present government added more teeth to it by amending it recently (Benami Transactions (Prohibition) Amended Act, 2016), activities to catch benami properties are still going on slowly.  For example, this amended Act came into existence from November 1, 2016. However, action taken is restricted to a few immovable properties and bank deposits after demonetisation (bank deposits are also treated as property under this Act).
Finding the real beneficiary of benami properties is a Herculean task and that is the main reason for its slow implementation.

What are the measures to speed up this information gathering?  For this the government should come out with cash reward up to Rs 1 crore for ‘secret informers’ (those who give tips to tax agencies). But the success rate will be less because people will be scared that some rogue employees from these agencies will leak the information of the informer.  For example, similar rules in income tax and customs rules are not fetching big information. Since most people already have an Aadhar number, asking them to link it to their property documents is a better option.

The main advantage of this strategy is that the tax authorities will get details about ‘legal owners’ (owner as per property documents) immediately. Several historical property deals might have happened in fictitious names and they will get stuck immediately.

Several black money hoarders also used to register properties in other’s name (e.g. in the name of servants, some family members who are poor, etc) after getting their signatures (these poor people have no idea what these signatures are meant for).

In these cases, the original property documents are kept by the ‘original owners’ and in most cases, they also keep a power of attorney signed by ‘legal owners’.

Once the Aadhaar linkage happens, tax authorities can approach the ‘legal owners’ and it can be treated as benami property if the ‘legal owners are unaware or denies knowledge of the ownership’.

Even if the ‘legal owner’ takes onus and claims that it is his property, he needs to show the ‘source of income’ for buying that property (e.g. will be difficult for a house maid to show source for property worth crores).

Will this amount to harassing the ‘genuine tax payers’ as the Aadhaar opponents will put it?

No, because there are several provisions in the Benami Transactions (Prohibition) Amended Act, 2016 to protect them. For example, the usual transactions like buying property in the name of spouse, kids, parents, joint names with siblings, etc is already exempt in the Act. However, they need to show the source of money used for such purchase.

Will this amount to some discomfort to ‘genuine tax payers’? Yes, because they may have to visit the registrar’s office for updating their Aadhaar number.

However, most of them will support this move because it will result in unearthing huge black money. Only thing, since this process will be time consuming (some people may be working in cities, but may have properties in villages), government should give enough time to property owners for doing this.

Tamil Nadu to acquire 450 acres of land for Coimbatore airport

06 Monday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Buildings, Construction, Infrastructure, Property, Real Estate, Real Estate Buyers, Real Estate Developers, Real Estate India, Real Estate India News, Real Estate News, Real Estate Residential, Real Estate Tamil Nadu

The Coimbatore district administration has initiated steps to acquire about 450 acres to expand the city airport and has proposed to give a compensation of Rs 1,500 per sq ft for residential land and Rs 900 per sq ft for agricultural land. An additional Rs 1,500 per sq ft will be provided for buildings. The acquisition would spread across regions like Uppilipalayam, Chinniyammalpalayam and Singanallur and would be completed by December end.

Land owners were urged to cooperate with the administration to speed up the acquisition process for expansion of the international airport to facilitate operation of bigger aircraft.

This is the first major land acquisition taking place for an infrastructure project in the state after the new land acquisition legislation was passed in 2013. While the norms prescribe two times the market value of land in urban areas -which is the case with Coimbatore airport -what is being offered by the administration as compensation to land owners is not even half of the market value. The guideline value of agricultural land in the region is just Rs 35,000 per cent and for residential land it is Rs 65,000 per cent. However, the market values are Rs 8 lakh and Rs14 lakh per cent respectively, say sources in the realty sector. The state government has been trying for acquisition of additional land for the past 10 years, but has not been able to make any headway.

The district administration has fixed the acquisition price after a recent interaction with residents, industrialists and farmers of the area.  The price fixed for residential land was far too low and not acceptable.

How could people accept Rs 1,500 per sq ft for a house when the cost of construction is more than Rs 2,000 per sq ft? Also, who would bear the rent for about two years that a person would take to construct a new house?

The additional land will help extension of the existing runway, facilitating landing of larger aircraft like Boeing 787. The present area of the airport is 300 acres. The present runway is 2,970 metres long and it is likely to be extended to 3,800 metres. Moreover, new taxiway will be laid.At present, there are three international flights operating out of Coimbatore Interna tional Airport. Another important criterion for international carriers to land in an airport is availability of 75 m space on either side of the runway. Smaller cities like Madurai and Trichy are also expanding their airports.While Madurai has 615 acres, Trichy has 750 acres at present. In comparison, Chennai airport has close to 1,500 acres and is in the process of acquiring another 200 acres.

With the announcement of Air India Express’ new flight to Singapore from Delhi via Coimbatore, the number of operations has reached its maximum. Soon, a private airline is expected to operate an additional flight from Coimbatore to Bengaluru while Air India will begin its operations from the city to Bengaluru in December.

 

Is 2 BHK apartment gaining more popularity?

04 Saturday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Buildings, Construction, Development, Property, Real Estate, Real Estate Buyers, Real Estate India, Real Estate Investment, Real Estate News, Real Estate Rental, Real Estate Residential

The smaller 2-Bed room House and Kitchen apartments are getting popular among home-buyers and tenants alike as they are affordable and also fulfil their need for privacy.  Isn’t is a proud moment for any individual to own a house, and that feeling is amplified when it is a 2-BHK? Does it matter even if it is 350-400 sq ft with an additional room? Keeping this in view, several developers have been building compact size homes with all the amenities of a 2-BHK?  For the last few years, there has been a deliberate effort in the realty sector of resizing residential units to offer them at affordable prices. And the reduced 2-BHK is one of its products targeting middle-class buyers. Compact homes are definitely a huge trend now and a 400 sq ft 2-BHK apartment usually fits the bill. Developers are now gaining traction for this segment and have thus, started developing smaller homes. They are economical and affordable and also, the average family size that is between two and six people, can easily accommodate in this size.

While developers have traditionally preferred to focus on large luxurious projects due to higher margins, the new trend is to provide a more attractive product in terms of specifications, size and price but capitalise on volumes, thereby catering to the huge unmet demand for smaller apartments. The 2-BHK configurations are currently the most sought-after. It suits the family’s requirement perfectly as it provides rooms for both, the parents and children. Young buyers are not taking chances with large home loans and prefer to buy homes that are compact but affordable.

One of the important factors driving demand for compact homes is the need for privacy that is usually unmet in a 1-BHK apartment. Thus, having an extra room, regardless of the size, is the key deciding factor.These flats have greatly benefited bachelor tenants who live with a group of friends as they get an additional room at the same renting cost of 1-BHK. It is often observed in the big houses that a lot of space is wasted; however, in compact homes, space is utilised optimally. 1-BHK flat is certainly not enough for growing families. Space is not the issue, but  because there is just one bedroom, privacy is restricted. Hence, isn’t a small sized 2-BHK is definitely a good option for the middle class buyers? With the increasing availability of these compact apartments, the dream, of property buyers of owning a 2-BHK is now being fulfilled.

Will Realty Sector fall under the ambit of GST?

04 Saturday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Buildings, Construction, Development, GST, Housing for All, Property, Real Estate, Real Estate Buyers, Real Estate Developers, Real Estate India, Real Estate India News, Real Estate Investment, Real Estate News, Real Estate Regulations, Real Estate Residential, Real Estate Taxation

While the real estate industry was still analysing the impact of Goods and Services Tax (GST) on the prices, the government is hinting at making it unified across the nation. The Union Finance Minister recently hinted at bringing all real estate transactions into the ambit of GST.

As real estate witnesses a high amount of tax evasion and cash generation, the finance minister underlined the pressing need to bring the sector under GST purview. He also went on to add that some states had been insisting on doing so.

India Brand Equity Foundation, a trust founded by the Department of Commerce, Ministry of Commerce and Industry has estimated that the realty market in the country will touch $180 billion by 2020 and states that residential real estate contributes about five-six per cent to the country’s Gross Domestic Product (GDP).

As of now, a 12 per cent GST is charged on the construction of a complex, building, civil structure or intended for sale to a buyer, either wholly or partly. On the other hand, land and other immovable property have been kept free from the GST. The rate of stamp duty varies from state to state and is in the range of three to ten per cent.  Currently, ready-to-move-in properties, sale of land and stamp duty are out of the GST ambit. These transactions are considered as `exempt supply’ to effectively reduce the input tax credit. If the real estate sector is brought under GST, wouldn’t he home-buyers  pay uniform tax nationwide? Wouldn’t Stamp duty and land sale may also come under the GST ambit? Would there be minimum burden on the home-buyers? Wouldn’t the real estate sector become further more transparent and organised? Wouldn’t charging both 12% for under constructed properties apart from stamp duty charges amount to double taxation?

TN RERA gets its permanent office in Chennai

03 Friday Nov 2017

Posted by Praveen Saanker in Uncategorized

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Buildings, Development, Property, Real Estate, Real Estate Chennai, Real Estate Chennai News, Real Estate India, Real Estate India News, Real Estate News, Real Estate Tamil Nadu, Real Estate: CMDA, RERA :: TN, TN Ministry of housing and urban development, TN RERA Rules

The Tamil Nadu Real Estate Regulatory Authority (TNRERA), the real estate regulator for the state of Tamil Nadu and Andaman and Nicobar Islands was until now operating from the office of CMDA’s vice-chairman at Thalamuthu-Natarajan Maaligai.   Today, it has got its permanent office at Egmore in Chennai. It would function from the Chennai Metropolitan Development Authority’s (CMDA) second tower on Gandhi Irwin Bridge Road.  The authority was established after the state government notified the Tamil Nadu Real Estate (Regulation and Development) Rules, 2017, on June 22 this year.  As per the TN RERA rules, an upcoming realty projects with a minimum of eight units must be registered with the TNRERA, while new housing plots also come under the purview of the realty regulator, which also makes it mandatory for the Real estate agents to register with the authority, who would also look into the grievances of homebuyers and builders, based on the complaints, wherein the developer and buyer would be called for an inquiry by the real estate regulatory authority.   The TN RERA would be chaired by the Secretary of the Ministry of Housing and urban  development.

Insolvency Regulations for individuals and partnership notified on December 2017?

03 Friday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Buildings, Construction, Insolvency and Bankruptcy Board of India, Insolvency Bankruptcy Code, Property, Real Estate, Real Estate Buyers, Real Estate Developers, Real Estate News

The rules of the new insolvency regulations to bring individual businesses and partnership firms under its purview are likely to be in place by December this year.  The draft rules dealing with insolvency resolution process of individuals and firms was put on the website for public comments with a deadline of 31 October and the Insolvency and Bankruptcy Board of India is continuing with interactions on the draft rules and indicated that feedback would be considered provided it reaches before November 10.  An Official of Insolvency and Bankruptcy Board revealed that initially firms, individual business and corporate guarantors would be brought under the purview of the Act, however, individuals would not come under the purview since expanding the scope on the entire individual population would not be feasible currently with the given infrastructure.  How would this affect the realty sector, given that now even the small scale individual builders and partnership firms can also be targeted?

Public interest at the cost of private impairment?

03 Friday Nov 2017

Posted by Praveen Saanker in REAL ESTATE NEWS AND UPDATES

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Bombay High Court, Buildings, Construction, Development, Property, Real Estate, Real Estate Buyers, Real Estate Developers, Real Estate India, Real Estate India News, Real Estate Investment, Real Estate News, RERA, RERA :: MAHA, RERA Act

The Center and State Government of Maharashtra have stressed that a law can be made in public interest to overturn a private contract. Both were defending the new Real Estate (Regulation and Development) Act (RERA) and its provisions against a constitutional challenge from builders who questioned its retroactive application on pending projects under old agreements.

The Government can, contrary to the builders’ plea, make a law which has the effect of changing obligations under an existing contract which seeks  to emphasise that RERA has a ‘retroactive’ application on pending unfinished projects. There is no constitutional guarantee that the terms of a contract will have to maintained. The legislature is empowered to bring in law in public interest that may impair or completely over turn a private contract and its obligations.

The new real estate regulatory law enacted by the Parliament last year came into force on May 1 this year, is facing a constitutional challenge from several builders and the Bombay High Court is tasked to decide on its validity. Home owners have intervened to support the law which provides that a builder is liable to return amounts to flat buyer if possession not granted by the date mentioned in the agreement. The builder may have to return the amount with interest and compensation if the buyer withdraws from the project and also pay interest per month till possession is handed, if the buyer stays on with the project.

Why is the Government hell – bent on supporting the homebuyers rather than the contractors?  The answer is that the larger interest of home buyers is being protected in public interest by RERA, an act which is meant to bring in transparency and accountability for development of real estate sector.What RERA seeks to do when it says that the authority will ensure completion of a project after its registration has been revoked for defaults by its builder promoter, is only to finish his unfinished work, which was his obligation. The rights of the buyers are kept in mind and thereby their interests is of paramount importance.  Does this mean that we would no longer see a diluted RERA anytime in the future?

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